On 26 May and 9 June 2011, just before and after the Shangri La Dialogue in Singapore, in which China emphasized its commitment of “maintaining peace and stability in South China Sea”, Chinese fishery patrol ships cut seismometer cables of Vietnam’s Binh Minh 02 and Viking 02 oil exploration vessels within Vietnam’s Exclusive Economic Zone (EEZ), triggering a series of public demonstrations in Hanoi and Ho Chi Minh city. Vietnamese accused China of “systematic action” that “is aimed at turning the undisputed area belonging to Vietnam into an area under dispute in order to materialize China’s nine-dotted line claim in the East Sea”  . China responded to the complaint and protests by warning that “any exploration in the vicinity of the disputed Spratly islands without its consent was a violation of its jurisdiction and sovereignty”. 
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The incident is just another evidence for the increasing tension in the Sino-Vietnamese relations over the South China Sea dispute which has become a hot spot. The complex dispute is not only about the potential natural resources or strategic locations of the area, but most importantly the territorial sovereignty. In this dispute, Vietnam faces a challenging dilemma: how to maintain and develop the strategic bilateral ties with China and settle the dispute in favor of its national interest at the same time? Tracing the concerns of Vietnam, an overview of the dispute will be provided in the first section before it comes to the policy discussion in the second section, in which six possible options are put forward: (1) Multilateralize the dispute through ASEAN forum; (2) Internationalize the dispute by involving outside major powers; (3) Resort to the international law of the sea and international arbitration; (4) Build up self-reliance; (5) Go for joint management of overlapped resources; (6) Cooperate and struggle bilaterally and multilaterally. The paper concludes with recommendation of a comprehension approach which is cooperating and struggling bilaterally and multilaterally (policy option 6).
II. OVERVIEW OF THE SOUTH CHINA SEA DISPUTE BETWEEN VIETNAM AND CHINA
1. The significance of the South China Sea
The South China Sea is a part of the Pacific Ocean which encompasses a large area of about 3,500,000 square kilometers, spreading from Singapore and the Strait of Malacca to the Strait of Taiwan. It comprises more than 200 small islands, reefs, and cays, most of which are inhabited. The two largest archipelagoes are the Paracel islands which covers an area of about 15,000 square kilometers with about 30 islets and reefs, and the Spratly islands which stretches over an area of 180,000 square kilometers with more than 100 features.  It is widely acknowledged that the South China Sea, especially the two largest archipelagoes, has a great importance in terms of geo-politics as well as geo-economics because of its strategic location as a busy passageway for about one third of world’s ships and presumed rich natural resources, especially oil and gas, underneath. 
2. The South China Sea Dispute
Apart from Vietnam and China, the South China Sea dispute involves four other disputants, the Philippines, Malaysia, Brunei and Taiwan. All disputants except Brunei occupy certain area. “Vietnam occupies 21 islands, the Philippines, eight, China, seven, Malaysia, five and Taiwan, one.”  All claims are made based on different historical rights, colonial inheritance, territorial and legal grounds, including overlapping and competing claims over either maritime zone or sovereignty over islands. The Philippines refers to the principle of “discovery of unclaimed territories” and claims sovereignty over Kalayaan archipelago which comprises eight islands in the Spratly archipelago  . Brunei and Malaysia make advantage of legal bases given by the 1982 United Nations Convention on the Law of the Sea (UNCLOS or Convention) to assert their sovereignty rights over reefs for Brunei and islands in the southern Spratly for Malaysia. Taiwan, based on historical ground, claims its right over the Pratas island which used to be occupied by China.
China claims are based on the so-called “nine-dotted U-shape line” which first appeared in a map published in 1948 in a private publication in China and encompasses about 80 percent of the South China Sea, including the Paracel and the Spartly islands. Despite China claims its sovereignty over this area, giving that it has “historical rights” to do so because the Han dynasty in the second century used it as the navigation route,  it has never officially declared and ignored calls to clarify if it also claims to the rights over maritime space enclosed which is far beyond 12 nautical miles from the disputed islands and includes EEZ and continental shelves that overlaps the continental shelves of other claimants as stipulated in the 1982 UNCLOS.  While the authenticity of China’s “historical rights” to sovereignty over the area as well as its claim over the maritime water remains unclear, China opposes any activities by other claimants within this U-shape line.
Vietnam makes reference to historical data, effective occupation, colonial inheritance and legal ground to claim its sovereignty over the Paracel and the Spratly islands as well as more than 200 nautical miles of continental rights as stipulated in the 1982 UNCLOS. It has cited a number of credible documents and maps to prove its occupation and sovereignty exercise over the islands since at least the Le dynasty in the 15th century, throughout the French colonial time until 1974, when China used force to seize the Paracel, killing 53 Vietnamese soldiers  and 1988, when the two sides clashed again in the Spartly islands, Vietnam lost 7 islands to China and 64 Vietnamese soldiers were killed.  The Paracel and 7 lost islands in the Spratly islands were placed under the jurisdiction of Hainan Province.
Below are some recent developments that provide a snapshot of the increasing tension between the two countries over the dispute:
In May 2009, Vietnam and Malaysia submitted a joint report on territorial claims in the South China Sea to the UN Commission on the Limits of the Continental Shelf. In response, China submitted its U-shape line map. 
On 26 May and 9 June 2011, China ship cut the cables of two Vietnamese oil explorations vessels, ramping up the public protests in Vietnam.
China detains and seizes hundreds of Vietnamese fishermen every year, accusing them of violating its unilateral fishing ban. On 22 February 2012, Vietnam accused China of shooting and damaging a Vietnamese fishing boat near the Paracel. On 3 March 2012, China detained 21 Vietnamese fishermen and their two boats in waters near the Paracel and demanded each boat $11,000. Vietnam strongly protested against the requests  .
On 15 June 2012, Vietnam conducted a military air patrol over the Spratly islands and then announced regular air patrol practice. In response, on 28 June 2012, China also commenced regular air patrol to the Spratly islands. 
China warns and threatens foreign companies for joint oil exploration activities with Vietnam in the overlapping area while offering oil blocks to its foreign partners. On 23 June 2012, China offered nine blocks located within Vietnam’s 200 nautical miles EEZ to foreign operators. Vietnam condemned China’s “illegal offer” and requested China to cease the bidding. 
On 21 June 2012, Vietnam passed the Law of the Sea of Vietnam restating its claims over the Paracel and Spratlly islands. In a tit-for-tat response, China immediately announced the establishment of prefecture-level Sansha City (officially created on 24 July 2012) to administer the disputed islands and surrounding waters as well as the establishment of a military base (officially created on 19 July 2012) in the City. Vietnam condemned the establishment of Sansha City, stating that it “violated international law, seriously violating Vietnam sovereignty over the Paracel and Spratly archipelagoes.” 
The above developments indicate an “action-reaction cycle” with escalating strains in the South China Sea which makes it difficult to reach a solution acceptable by the both sides. The following section will discuss several policy options for Vietnam to settle the South China Sea dispute with China.
III. POLICY OPTIONS
1. Multilateralize the dispute through ASEAN forum
This option implies that Vietnam should continue to highlight the issue in ASEAN; emphasize the impacts of the dispute on the regional stability and peace in order to forge a united front “to persuade China to solve the issue peacefully and multilaterally.” 
ASEAN comprises four out of six claimants, thus it is the most important platform for claimants to meet, discuss and seek for available solutions. The body achieved some success in building mutual trust and confidence between ASEAN claimants and China. Some evidences are the 1992 Declaration on the South China Sea, the 2002 Declaration on the Conduct of Parties (DOC) and the 2011 Guidelines to Implement the DOC in which stated that the dispute should be solved “by peaceful means, through friendly consultations and negotiations by sovereign states directly concerned”. These documents, however, have no legal force. Therefore, ASEAN and China have also agreed in principle that a more binding Code of Conduct of Parties in the South China Sea (COC) needs to be quickly completed and adopted.
Yet the ASEAN’s effectiveness in solving the dispute is being questioned. As mentioned, the DOC was just a political statement with no legal binding requirement. China agreed to discuss the COC at an “appropriate timing” but has never stated when “an appropriate timing” is.  Most importantly, “divisions between member states, stemming from different perspectives on the South China Sea and differences in the value each member places on their relations with China, have prevented ASEAN from coming to a consensus on the issue.”  On one side, claimants might share the same stand towards China but none of them is willing to compromise with other claimants over the sovereignty issue. On the other side, non-claimants ASEAN members value the relations with China which are believed to be affected if they are pulled into any undesirable conflict with China. The recent failure of ASEAN in bringing forward a joint statement at the July 2012 Foreign Ministers’ Meeting in Phnom Penh due to the divergence in attitudes towards the dispute is a clear evidence for this internal ASEAN clash. This also indicates China’s influence over other ASEAN members, Cambodia as ASEAN Chair in this case, to maintain its interests. Even if Vietnam, through its lobby efforts to pull ASEAN claimants and non-claimants together, it is still difficult to reach a solution since China insists on its bilateral negotiation strategy of “treat each case differently, and defeat each one separately.” 
2. Internationalize the dispute by involving outside major powers
This option suggests that Vietnam should deepen its multifaceted relations, including economic, diplomatic and military cooperation, with outside powers who have interests in the South China Sea; emphasize the importance of the peace and stability of South China Sea towards their interests in order to encourage a common effort of navigating China’s assertive claims and actions in the region.
Over the past years, Vietnam has had some success in expanding and strengthening its relations with major powers through a wide range of cooperation, including regular military visits, military technology and weapons exchanges and joint energy exploration. For example, to deepen relations with the U.S who has the largest economic interests in the South China Sea with $1.2 trillion out of $5.3 trillion of total trade passes, Vietnam has facilitated joint rescue exercise with the U.S army, allowed U.S warship to access the military Carm Ranh Bay for the first time since the end of the Vietnam War  , offered gas and oil block in Vietnam’s EEZ to the U.S ExxonMobil oil company, etc. This results in a stronger stake of the U.S in the disputed area. At the 2010 Shangri La Dialogue in Singapore, the then U.S Defense Secretary Robert Gates expressed U.S interests in Vietnam’s offshore oil exploration and declared that the U.S opposes to “any effort to intimidate U.S corporations or those of any nation engaged in legitimate economic activity”  . At the 2010 ASEAN Regional Forum in Hanoi, U.S. Secretary Hillary Clinton declared that “the United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea” and called for “a collaborative diplomatic process by all claimants for resolving the various territorial disputes”. Apart from the U.S, Vietnam has been trying to boost relations with other major powers. For instance, in September 2011, Vietnam was successful to reach an agreement on joint exploration with India. Vietnam has also supported activities of Russian energy company Gazprom in joint oil exploration projects in Vietnam’s maritime waters. Besides, during 2009 alone, Vietnam bought from Russia six Kilo-grass submarines and 12 Su-30MKK fighters, becoming one of top weapon importers of Russia  . The growing relationship with major powers as well as increasing involvement of these major powers in the disputed area does help to increase Vietnam’s leverage to China in the South China Sea dispute. “Now China made efforts to further engage Vietnam through party-to-party talks and keep their disagreements behind closed door”. 
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However, Vietnam should stay aware that strong alignments with major powers to balance too aggressively against China would irritate China and lead to subsequent negative economic and political consequences. Meanwhile, Vietnam cannot outright rely on any major powers because these countries have their own priorities and their consistent longstanding position in the South China Sea is neutrality. In other words, they might be willing to sacrifice the relation with Vietnam if it conflicts with their priority interests. Vietnam should never get too close to any powers but better to maintain limited alignments to just keep China in check.
3. Resort to the international law of the sea and international arbitration
This option recommends that Vietnam should resort to the international frameworks to solve the dispute, that is, Vietnam should present evidences of its sovereignty rights over the Paracel and Spratly islands, which abides by the 1982 UNCLOS, to the International Tribunal for the Law of the Sea in order to gain international support and acknowledgment of Vietnam’s “facts on the ground” while at the same time putting pressure on China to clarify its claims and evidences.
The 1982 UNCLOS is aimed to manage potential conflicts/disputes among countries over the rights to the world’s ocean. “It holds valid legal title to sovereignty over their islands has exclusive right to exploit living and nonliving resources within 12 miles of their territorial sea and 200 miles beyond, known as the exclusive economic zone (EEZ).” 
Vietnam has ratified and abided by the 1982 UNCLOS since 1994. Its 2012 Law of the Sea, in which clarifying its territorial seas, EEZ and continental shelf, was also built on the provisions of the 1982 UNCLOS. Vietnam has also been providing its historical data showing that it has been exercising effective occupation of the islands for a long time. Recently, it introduced a 1904 Chinese official map which showed that the Paracel and Spratly islands were not belong to China  and received attention from international experts and community. Therefore, it is very likely that Vietnam will win over China if the case is sent to the international tribunal.
China is also a participant of the UNCLOS (since 1996) but its interpretation of the Convention is “controversial”. China has never clarified its vague claim of “historical rights” of the area inside the U-shape line which is not suitable and so unlikely to be supported by the provisions of the law. It “rejected the mechanism for international arbitration and adjudication provided by UNCLOS”  and prefers bilateral negotiations with other claimants in which China will have more advantageous position.
4. Build up self-reliance
This option proposes Vietnam to build up its internal economic and military capabilities to deter China’s aggression by continuing reforming its economy and modernizing its military forces.
Given that China used to use force to seize the Paracel and a part of the Spratly in the past as well as it has been developing its military strengths and being more assertive to claim its ownership over the islands, there could be a chance that China would use force again and/or use its overwhelming economic power to put pressure on Vietnam and other countries to give up on the issue.
Being aware of China’s threat, Vietnamese government has been developing its internal strengths, both economic and military inclusive, especially military capability. Compared to 2003, Vietnam’s military spending has been increased by 83% in 2012  , in which mostly is invested in developing naval and air forces; a large amount of budget has been spent on weapons purchase. Vietnam is currently one of the top importers of Russia’s weapons  . It is also persuading the U.S to lift the ban on lethal weapons so that it could purchase more U.S weapons and modernize military.  Pessimists believe that despite economic and military strengthening efforts, Vietnam can never outweigh China in economy and military power but still under China’s influence. Economically, China is the largest economic partner of Vietnam with expected two-way trade of $60 billion in 2015; Chinese products currently account 60% imports of Vietnam  . Militarily, Vietnam’s 2012 military budget is $3.3 billion while China’s is $106.4 billion  . However, these economic and military strengthening efforts still deserve a try because if conflict is the case, it will impose certain costs on China and so deter China’s aggressive actions.
5. Go for joint management of overlapped resources
This option implies Vietnam’s possible consideration of joint management of resources at areas where claims are overlapped with China. This means both sides have to reach a consensus over the measure of maritime space surrounding each island, regardless of ownership, and then agree to jointly administer the overlapped claimed area outside the maritime space. This differs from the early 1990s proposal of “shelving disputes and going for joint development” by the late Chinese leader Deng Xiaoping in which China ignored the possibility of joint development in the Paracel while proposing a joint management with Vietnam in the West Vanguard Bank Basin locating in Vietnam’s maritime waters. 
Obstacles to this attempt of joint management is that China claims much of the South China Sea, including most of the Vietnam’s islands and asserts its rights to unilaterally benefit from the resources while Vietnam is also strong in its position of sovereignty rights over these islands. Both sides have condemned each other of exploring and exploiting natural resources, mainly fish and gas-oil, within their maritime waters. China consistently challenged foreign oil companies having joint exploration activities with Vietnam and warned them of “unspecified consequences in their business dealings with China”. This uncompromising attitude by the both sides, especially by China, makes it impossible for a consensus to be reached on measuring the overlapped area which is not really belongs to any party.
6. Policy Recommendation: Cooperate and struggle bilaterally and multilaterally
Vietnam should consider a comprehensive approach that provides it with flexibility and effectiveness in dealing with China. This option is, therefore, recommended because it develops a comprehensive approach by taking into account of both bilateral and multilateral cooperation and struggle, considering the special characteristics of the Sino-Vietnamese relationship:
Deepen the multifaceted bilateral relationship with China through different networks of Party-to-Party, Government-to-Government, and People-to-People, especially Party-to-Party channel. History shows that the special relation between the two communist parties enables the two sides to repair their bilateral relations fast after serious incidents. For example, strains in the Vietnam-China relations after the May and June 2011 events was significantly reduced after the visit to China by Vietnam Communist Party General Secretary Nguyen Phu Trong in October 2011 when the two sides agreed on the six basic principles in settlement of the dispute, emphasizing the importance of negotiations and friendly consultations. 
Encourage ASEAN unity as a primary multilateral platform to counter China’s assertiveness. ASEAN has certain setbacks but it cannot be denied that through DOC and other cooperation mechanisms such as ARF, FTA, ASEAN has some significant success in building mutual confidence and developing mutual interests with China. Of course, as analyzed, it is tough to forge a united and effective stance among ASEAN members; however, common interests of peace, free navigation and other legal interests under the 1982 UNCLO could be driving forces to make this more likely to happen.
Deepen ties with major powers. Direct interests of maintaining free navigation in the South China Sea are motivations for these powers to align with ASEAN and Vietnam to balance against China’s aggression. The depth and durability of commitment by these major powers, however, might be doubted because they also have their own priorities. Therefore, Vietnam should not outright rely on the outside powers to outright balance against China, but maintain a safety distance from either side and at the same time build up its capacity for self-reliance.
Well prepare and announce sufficient historical and legal data to prove Vietnam’s sovereignty rights over the Paracel and Spartly islands; mobilize media, including social media, to effectively involve in the issue by providing transparent and correct information in order to make Chinese people and international community to understand correctly about the situation, urge the world to support Vietnam and impose pressure on China to clarify its claims.
The South China Sea dispute between Vietnam and China has become more and more sensitive and complicated because both countries are so strong in their own positions in the dispute that no one is willing to compromise their rights over the Paracel and Spratly islands – a convergence of geo-politics and geo-economics. Vietnam has more credible historical and legal data to prove its sovereignty rights over the islands but the strategic significance of China to Vietnam and China’s assertiveness put Vietnam in a policy dilemma between developing the strategic bilateral relationship and struggling to win over China in the dispute. To reduce tensions, Vietnam should have a comprehensive approach, that is, boosting bilateral ties while seeking ways to balance against China at the same time, internally or externally. In this connection, this paper recommends Vietnam to simultaneously (i) deepen its multifaceted relationship with China through Party-to-Party, Government-to-Government and People-to-People channels; (ii) continue to take advantage of ASEAN as a primary platform to counter China’s claims; (iii) develop ties with major powers while not forget to build up self-reliance; and (iv) make public all evidence to prove Vietnam’s sovereignty rights to the Paracel and Spratly island in order to gain support from international community and put pressure on China to clarify its claims and deter its aggressive actions. However, it should be acknowledged that since the core of the South China Sea dispute is the territorial sovereignty that involved claimants will never want to compromise, it might too sensitive and complex for a feasible solution to thoroughly settle the dispute in a foreseeable future.
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